A detailed assessment of the mid/long-term operating environment for global refining, and the implications for oil products trade. We forecast products demand and review refinery investments to identify the likely pressures on the refining sector and what this could mean for refining margins in the next 5-10 years.
The refining industry—quite rightly—is currently focusing on the dual impacts of the COVID-19 pandemic and the Saudi/Russia price war. Hopefully, these will be short-term issues although they will have longer-term impacts that could affect the industry for years to come.
Within all the current chaos, refining capacity and complexity continues to increase—further impacting the sectors’ ability to balance supply with demand. Demand is still growing, albeit at lower rates than previously forecast. However, the nature of the product barrel is changing putting fresh challenges in front of the refiner.
In this report we take the time to look at how products demand will evolve and how the refining landscape is changing.
We continue to forecast that product demand growth will be led by light distillates, especially naphtha but also gasoline, particularly in the Asia Pacific. Jet demand continues to increase and this will put additional pressure on refiners who are trying to maximise naphtha production as well. However, it seems gasoil/diesel demand may well have peaked. Perhaps the existing and forecast hydrocracking capacity will be more focused on jet fuel production rather than diesel.
With the shift to lower sulphur “IMO 2020” fuels effectively done, we now have a new product in the mix. This will further influence refinery margins and crude processing decisions.
Indeed, in a world that seems to have plenty of refining capacity it will significantly influence the decision to run simple or complex capacity—something the industry has not seen as an everyday issue before.
Our conclusions will highlight how demand pressures are impacting refinery utilisation, the pressures on refinery throughput and on refinery margins. It will also reinforce our earlier messages about the IMO 2020 regulation changes; all set within an internally consistent framework of refinery capacity, estimated refinery margins, and product prices. We review how surplus refining capacity may change, challenging the call for further capacity additions.
Annual World Refining Outlook (PDF - PowerPoint Layout)
FGE will be available for a conference call, WebEx meeting, or general meeting to present and discuss the key findings of this report.
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